Jobs report and Fed rate-hike dance begins anew

October 0500:482015

The last jobs report, released on the eve of Labor Day weekend, was billed by many as the most important reading on the health of the U.S. employment market since before the invention of the automobile. But the August jobs report was viewed as critical at the time. It came just two weeks before the Fed’s now infamous September policy meeting — the one where they were supposed to hike interest rates for the first time since 2006, but opted not to. That decision thrust Wall Street into an uncertain state that still continues today.

That’s not to say the September jobs report, set for release at 8:30 a.m. ET today, is not important. It most certainly is. The health of the U.S. job market remains one of the two key pillars of the Fed’s so-called dual mandate, which is getting the U.S. economy back to full employment and moving stubbornly low inflation back near the Fed’s 2% band.

For today’s “Jobs Friday,” Wall Street is forecasting that the economy created 200,000 new jobs, up from the disappointing 173,000 in August. That weak jobs report, coupled with financial turbulence around the globe and a global slowdown, were cited as reasons why the Janet Yellen-led Fed opted not to hike rates a few weeks back. The takeaway today will be whether the job market was able to hold up and withstand all the negativity caused by China’s economic swoon. If the jobs count is north of 200,000, it gives the Fed cover to hike rates by the end of the year, as they say still say they plan to do.